How do I know which loan amount I need?
This question needs to answered before you apply for a loan. The formula for this is:
Purchasing price + ancillary costs + renovation costs – own resources
= required principal amount
Together, the principal amount and your own resources amount to the purchasing price with all ancillary costs and possible renovation costs.
Quite often you will hear that ancillary costs add up to 10%, but they can also be less expensive and vary between 5-10%. These costs include:
- 5% property purchase (Stamp Duty Land Tax, dt. Grunderwerbsteuer)
- 1% fee for entry in the land register
- 1% notary or trustee
- Optional: 3.6% real estate agent (3% + 20% value added tax = 3.6%)
For the cash flow calculation, it is important to include all ancillary costs (e.g. renovation costs, special equipment, solar panels, kitchen) in a transparent way because most of these investments will increase the property’s value.
To improve your credit rating, you should always state your own funds in full, even those that are not meant to be contributed. We recommend taking a screenshot of your online banking account, with an overview of all accounts, their respective balance and IBAN visible. If you have existing loans, these should also be visible as well as their current balance.
It is also important for the account owner’s name as well as the date to be included in the screenshot. This is why a screenshot of your phone screen is not ideal, as most smartphone apps do not show all the necessary information. You can also find the required data in your bank statement if you don’t have an online banking account.
